An indicator called the Relative Strength Index (RSI) is derived from an asset's price momentum. The asset's price change and its rate of change are the primary determinants used to calculate the RSI. These movements are regarded as oscillations, particularly as they have the potential to strongly diverge from two extremes.
The significance of calculating the RSI for a certain asset is to determine whether it is overbought or oversold. An RSI indicator that reads greater than 70 is typically regarded as overbought. RSI may show values less than 30 when it is oversold.
The price change of an asset over 14 periods—either on a daily or hourly chart basis—is used to calculate the RSI. The ratio of an asset's average gain throughout the time to its average loss is calculated. Ratings for RSI oscillations range from 0 to 100.